Lucky Lottery Winners ‘Extremely Upset’
The Herald Tribune takes us back to Florida. “US Home’s master-planned community Stoneybrook at Venice was red hot when it was unveiled in late 2004. In November 2004, when the first Stoneybrook homes were sold to ‘lucky’ lottery-winning buyers, it was standing-room-only, recalled Realtor Greg Sheller. Getting a Stoneybrook homesite then felt ‘like winning the Lotto,’ he said.”
“No more. The day the music stopped was about eight months ago, and now some investor/owners are scrambling for a chair. The ‘For Sale’ and ‘For Rent’ signs are out in force. The completed neighborhoods sit amid acres and acres of upturned dirt awaiting construction of newer neighborhoods. Many homes appear uninhabited, few cars are evident and the traffic is light.”
“Flippers are increasingly being forced into becoming reluctant landlords. So many flippers got pinched in a situation where they could not sell profitably, or at all, for the time being. Meanwhile the mortgage payments come due month after month.”
“There are issues with Stoneybrook, Realtors say. One is that Lennar/US Home has been aggressively discounting sales prices in many of its developments, including Stoneybrook. A property that US Home sold last year for $440,000 or substantially more can now be bought for about $390,000.”
“Only about 250 of the planned 900 homes are built so far, and on a recent weekday afternoon, the Lennar and US Home welcome centers were quiet. A visitor to a Lennar sales center was greeted by a note on the unlocked model door ‘back in 15 minutes, make yourself comfortable.’”
“During the wait, visitors are greeted with tomb-like silence, no phones ringing, no foot traffic, no buzz at all.”
“‘US Home will keep the sales pace, keep the start pace and keep construction going,’ said Rob Allegra US Home division president in Southwest Florida, adding that he thinks that is the best thing for homeowners. The ‘10-20 percent price cuts’ are simply an intelligent and timely reaction to market predictions, he said.”
“Jennifer Roemer, an agent who has two homes listed on Dancing River Drive, says her sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004. Roemer remembers the initial auction for Stoneybrook sites, saying that US Home ‘knew they were jam-packed with investors.’”
“‘My people are extremely upset,’ says Roemer, noting that ‘nothing has turned over’ other than what US Home is selling.”
“Kim and Chris Tritschler, husband-and-wife agents, represent two Stoneybrook homeowners who are looking to rent so they can pay their mortgages. ‘A homeowner is in no position to compete with a developer’ with hundreds of properties to sell, Chris Tritschler said.”
Let me be the first to say:
BAHAHAHHAHAHAHA!
I’ll add mine (one hand pointing at them, other loosely over my mouth):
PUHUHAHAHAHAHA!
But pay close attention. Many of these folks are moving from DENIAL to BARGAINING. The ****THIRD**** phase of grief. It’s getting closer!! The hard landing approacheth.
You are right, but only the leading edge is at the bargaining point. The mass is still in denial. But the sales of homes at much reduced prices will move the sheeple that were in denial into bargaining and that will REALLY drop the price. Once everyone is bargaining, that is when the price plunge will really occur. Well, that and when the refis and ARMs get denied and then the houses go on the market at firesale prices. Banks don’t care what the houses actually sell for when they reposes them. They just get the balance from the mortgage owner. Oh… and then when people lose their jobs the prices will fall again.
We’re merely seeing the dead cat bounce right now.
Wow.
Boo fucking hoo.
Poor Lottery winners.
Must suck finding out your sure thing is gonna cost you big time and is no longer a sure thing.
Only sure thing they are holding now is a BAG.
They deserve it.
“Jennifer Roemer, an agent who has two homes listed on Dancing River Drive, says her sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004.
And we will be happy if you get $210,000 for them!!!!
Yeah, that realtor line cracked me up. In case anyone is wondering, I’d be “happy” to profit $44,000 on an investment, too. Duh.
In reality, these people should be “happy” to break even.
O.T.
I friend of mine knows a loan manager at Washington Mutual.
He stated that Washington Mutual just started a dept. dedicated solely to contacting people with interest only A.R.M. loans that are due to adust.
They are offering a “workout”, renegotiate or what ever you want to call.
Rather than having the loan go from let’s say 5% to 7%(and pay the interest only at 7%)-They are going to tell borrowers they will fix the interest rate for 30 years at 5% (or whather the rate is before adjustment) however, the borrower must now start paying both principal and interest-not just interest.
Not a bad deal in today’s environment-I do not know if there are any fees(title, escrow, etc.).
I guess Washington Mutual would rather take a small loss today rather than a big one tomorrow. Maybe that is why they are a take over target.
Very Interesting. Is it legal to offer Loan Programs to some consumers and not others? Credit Scores are the same, income, LTV. Will F’d Borrowers get wind of this and try and get a loan with them(non WM consumers)?? Maybe they have an out as they are existing customer’s. Anyone know the particulars about “Discriminatory Lending”?. And if these Loans have already been packeged, say in an MBS. Who makes up the difference on the guarnteed returns.
Just questions I don’t know the answer to.
I don’t think its illegal. You reward your regular customers and offer them special deals to them in just about any business. Just like a GM or Nissan saying ok trade in your existing Chevy and we will give you 1.9% APR on a new Chevy.
They just need to set a standard for who is qualified what score and debt ratio you need and that its only available to those who are existing WM customers.
To me, looks like they are definately taking a small hit rather that getting burned in the future. Don’t forget not only will WM get burned by defaulting loans, they also could get nailed with a class action lawsuit for preditory lending for pushing these loans on customers.
This is not financially possible for WAMU. They could not afford to offer 5% on a 30 year fixed on billions of dollars of loans when the prevailing market rate for their mostly subprime customers are 6.5%+
Plug the numbers into a simple bond calculator and the price of the bond would fall 12+% on a ten year note going from a coupon rate of 6.5% to 5%. So the cost of this program would be at least 12+% of however many tens of billions of loans are eligible. I doubt WAMU is going to shell out a few billion dollars for a “customer loyalty” program for borrowers that didn’t understand the interest rate risks of the loans they were getting.
The other caveat here is that I’m guessing the vast majority of borrowers who had to go the NegAm, IO route when getting a loan probably won’t be able to afford payments on a regular 30 year mortgage, even if they were offered one near or even slightly below market rates.
A mortgage friend of mine thinks that interest only loans are smart business because they are setting themselves up for future loans to these clients. Looks like we’ll be seeing if this was greed or smart business real soon.
It was brilliant business. I’ve been meaning to write a blog entry along these lines for sometime now. Basically, the mortgage companies sold a loan product knowing that it would be “broken” shortly thereafter.
I think your friend is wrong. This department is an education program to inform said mortgage holders of what type of mortgage they actually have. I’m not kidding. Most SoCal idiots I know, have no idea what kind of mortgage they have. Hint: it ain’t fixed.
Excellent point…75% of the people in the US have only a HS degree, which basically means they can probably read and write at a traditional 7th grade level.
These mortgage products foisted on them are designed by people with PhD’s in mathematics and finance from major business schools.
Fattened pigs to slaughter.
Amazing as to what tricks the lending industry can pull out of the hat go in order to keep the RE loan ball in the air.
Math ability is probably even lower.
This is something to which we should be paying attention. If anything can keep the bubble going, for whatever period of time, the ability to refinance out of toxic loans may do the trick. Matter_of_time, please report back with more particulars about what WM is doing.
This is all the info. that I got.
Basically, it was the lure of cheap money and easy money that got this thing going.
The one thing will be is that if people were not able to afford principal and interest two or three years ago, why would they be able to afford it now?
Further, expenses are much higher today due to energy costs.
The economy is slowing regardless of the phony employment rate the Govt. puts out. The phony employment rate is because people who have given up looking for jobs are not counted as unemployed.
I was just in Hawaii last month. The tour bus operator stated that the real employment rate is about 20 to 25 percent because a lot of people have moved back with their parents due to lack of work.
I won’t even get into health care costs-however, I was sick last year and spent a week in the hospital-my bills excluding all doctors that saw me was over $45,0000-of course it was reduced.
“The economy is slowing regardless of the phony employment rate the Govt. puts out. The phony employment rate is because people who have given up looking for jobs are not counted as unemployed.
I was just in Hawaii last month. The tour bus operator stated that the real employment rate is about 20 to 25 percent because a lot of people have moved back with their parents due to lack of work.”
Anecdotal in nature — 2 years ago I was staying on Maui, in the upcountry section, and watched as a house next door was built. The workers (2-3) would come in the morning, drive a few nails, drink some coffee, leave, then come back and repeat. Then go home for the day. I’m only exagerating a little. It took 2 years to complete the home. Later I read that Hawaii’s unemployment rate is super low, and I think to myself “bullshit”.
Too late just took all my cash out of WAMU.
Bubble sitters shouldn’t patronize banks and enable the bubble with their cash.
They aren’t going to get below market interest rates. Even if they did it may save 10-20% of FBs the others are too far gone.
Yopu are sadly mistaken if you think WaMu, or most any other bank uses thier own money to fund a home loan. It is merely a debit on the ledgers of the Federal Reserve Banks.
You’re mistaken, it’s parcelled out to Fannie and re-sold as MBS
They have to have deposits in some fraction of the loans they make.
Take away the deposits and they can make fewer loans.
To originate a loan to be sold to Fannie or Freddie or the MBS market they have to have deposits to cover the required reserve fraction.
Take away the reserve fraction and it hurts their business.
A sold loan doesn’t really require any reserve (you’re selling it). You would need some requirement to cover the loan for the perhaps month you were booking it (if that), but most of the time they are precommitted and purchased at inception or nearly inception.
However, WaMu (like NorWest, now Wells Fargo) keeps a portion of their loans as part of an active business strategy. Their ability to do that is impacted by your deposits, although most banks are far enough above their regulatory minimums that all your deposit removal does is increase their cost of funds (they can borrow the money from all sorts of sources).
Finally, I believe that the Federal Home Loan Banks (there are 12 scattered around the US) are bigger partners with WaMu then the GSEs are.
If this is true, WaMu is playing it smart. They see the foreclosures coming and want to maintain damage. By early next year, their department should be proficient in making short sales as damage will continue to rumble for a long time.
This means WaMu is toast. These portfolios at 5% are worth nothing. A benchmark TNX yields higher than that.
wow - a company taking a proactive stance…unusual
If that story is true, I am impressed with the business ethics, morality, and their Business IQ by doing so.
That kind of story is an indicator that the people at Washington Mutual are interested in the well being of their customers, both borrowers and savers.
BTW, I recently learned the the previous CEO of Washington Mutual became the CEO of REI a cooperatively owned retailer.
In that kind of business, people can buy a share ownership in the business. And with that they can vote on Board of Directors, and share in the company profits by receiving dividends which are distributed once a year based on net profit and distributed to member/owners based on the total of their purchases. And their share/ownership is currently $15 and is completely refundable if the person decides they no longer want to be a member/owner in the company.
Los Angeles Friends In Deed
Damn– I liked REI. Great customer service, not pushy. We’ll see.
Nothing has changed since her tenure began.
She wasn’t CEO of WAMU, she was CFO, went to REI as COO and got promoted to CEO of REI.
Sally Jewell
Sally, thanks for your clarification.
I had the opportunity to speak to the REI CEO recently. It is as you stated. The one thing I would add is that she was referred to as a “bank president” at Washington Mutual.
I hate when someone beats me to such a well timed and well deserved…..
BAHAHAHHAHAHAHA!
Real Estate Articles from Inman News
——————————————————————————–
Story Tools
E-mail Story Printable Version
Comment on Story Reprint Rights
Sponsored By:
——————————————————————————–
Washington Mutual lays off 1,400
Call centers in 2 states targeted
Tuesday, May 30, 2006
Another HT story from a couple of days ago:
‘Susan Apkarian, a real estate agent with a year’s experience, has watched with distress as the real estate boom in Port Charlotte has disintegrated before her eyes. A year-and-a-half ago, Tad Amore and Miriam Cortes, who live together and are planning to marry, did what everybody tells young couples to do — they bought a home.’
‘The problem now is that they want to sell. Meanwhile, the red hot real estate market of 2003-05 has turned into the stone cold market of 2006. They’ve had the place listed since February, on the Multiple Listing Service, the realty bible, the whole time.
“Every week or two we will drop the price down, which usually drums up a few new showings. We were close to having somebody making an offer on it a couple of weeks ago, but the boyfriend’s father didn’t like it. They moved on.”
They started at $230,000, and their price last week was $212,000.’
‘We’re dropping it a bunch pretty much because we are desperate,’ Amore said.’
“Every week or two we will drop the price down, which usually drums up a few new showings. We were close to having somebody making an offer on it a couple of weeks ago, but the boyfriend’s father didn’t like it. They moved on.”
Time to hit the Code Red panic button, and drop the price quickly by a bunch to sell before the value reverts to pre-bubble levels.
O.K. I’m not clear here did they buy the house to live in or was it a quick flip to pay for the wedding ?
Ditto
Before this crazy boom started, anyone turning over a house after only a year and a half of living in it would EXPECT to lose at least a little money after all the fees, etc. It used to be common sense that you don’t buy a house unless you plan on living in it for a good while.
Thanks. Nice to be reminded of that fact. Brings back memories of dad telling me how they used to figure houses depreciated a few % points a year like any other big ticket item.
Somebody tell the IRS and we should revise depreciation in this crazy bubble market.
The rule of thumb was that unless you planned to stay in a home for at least FIVE YEARS (considered the break even point) that you should rent instead. The last five years have seen an amazing amount of people jumping into STUPID decision fueled by speculative greed and easy loans.
It used to be common sense that you don’t buy a house unless you plan on living in it for a good while.
Oh my gosh! I had forgotten about that! I’ve been reading so much about people selling after two years for $10-20k more, that I internalized it. I remember when we bought our last house, the rule-of-thumb was 3-7 years to break even on a sale.
To quote Frank Barone, “Holy Crap!”
MjM
When the market was still showing more signs of life, last fall, Apkarian and Pete, her partner in life, bought a town house in Cherokee Village, a new retirement-oriented community in Arkansas.
…we are basically cutting down on any profit we would make on the house.
It’s absurd that people think it’s reasonable to expect to make a profit on a home that they’ve owned for less than a year. At any other time in history, you’d be happy to break even on a home that you’d owned for less than 3-5 years, due to the transaction costs. The sooner people get back to seeing houses as places to live in vs. golden-egg dispensers, the better.
ok, so I’m confused here. People that aren’t committed enough to marry are willing to go in as partners on a financial deal of 1/3 to 1/2 million bucks.?
And didn’t most folks have to marry/scrimp & save, etc. before they could buy? Or was that only on History Channel?
Probably a bit more complicated than you’re making it out to be. Read the quote, they bought in a retirement-oriented community. Perhaps these two are a widow and widower, and remarrying would fudge up their social security / pension payments or whatnot.
ok, so I’m confused here. People that aren’t committed enough to marry are willing to go in as partners on a financial deal of 1/3 to 1/2 million bucks?
Hear hear! What are these people THINKING?
Oh BOO HOO! Cry me a river! GOD these stories are getting better and better every week!!! I can’t WAIT until next year! Talk about free entertainment.
Amen. I was told to not even consider moving for three years. What the hell are some newlyweds doing playing real estate roulette?
We’re a newlywed couple,, we’ve found this blog in March of 05,, just a month before our wedding.. and we decided to rent. We sure are glad to have made that decision.
$1800/mo. in NoVA area get us a v. nice 2br apartments in a nice location
Good for you. The last thing a new marriage needs is flipper hell. Shit, he has to focus his attention on more important stuff, like learning to leave the toilet seat down …..Congratulations and best wishes!
Excellent choice - good for you. In 3-4 years (and when you probably have saved up a hell of a lot more) swoop in and get yourself a right-priced home.
-Ed
Congratulations on your new marriage and being able to come to the financially correct decision.
The two of you will be rewarded for your patience.
The Winner’s Curse strikes again –
http://en.wikipedia.org/wiki/Winner’s_curse
GetStucco -
Where ya been?
I hope you weren’t out flipping houses?!?!?
Last weekend I was away from my computer, down south in Kentucky, aka land of alcohol, tobacco, and firearms.
There is quite a glut of properties for sale in Lexington, KY — a realtor at the wedding I attended said the number of used home listings was up by 50% from this time last year. (She also expressed a rather strongly-held view that “the bubble was going to pop” with nary a prompt from me.)
Of course, Lexington’s rate of inventory increase pales by comparison to PHX (up by 5X since last summer). Nonetheless, it is telling that even the heartland markets are seeing rather convincing signs of a housing slowdown underway, especially given that as recently as one year ago, all the “experts” were telling us that all housing markets are local, and that only some locally frothy markets near the coasts were at risk of seeing a significant downturn in the housing market.
We also passed through St. Louis en route, and I could not help but notice the tell-tale signs of high rise construction cranes putting up a local slice of Las Vegas (http://www.emporis.com/en/wm/cx/?id=108512). Nothing beats jumping onto the casino/condo mania bandwagon just before it sales over the edge of a cliff!
Getstucco - the “Winner’s Curse” is exactly what happened to my wife in the milk-can bid at the Friday-night auction. I’m glad you raised this point (and definition) because it will temper my enthusiasm when bidding for post-bust properties.
Government-school education must be horrible today — whenever I use the Ben’s-blog-appropriate phrase “keep your powder dry,” today’s kids look at me as if I’d escaped from the K-Pax home. (IMO, K-Pax is very under-rated movie, strictly for entertainment value.)
ebay would be a good training ground.
Getstucco — more — thanks for confirming what I am slowly learning from e-mail friends far out in the boonies. They are shocked to learn that their property values are going down. I warned ‘em. Nothing else I can do. At least I’m fortunate that all my friends still speak to/correspond with me — otheres here have not fared as well.
Link didn’t work for me, did a search and tinyurl’d it:
http://tinyurl.com/nxcpq
Sarasota/Bradenton seems to be ground zero in Florida.
Aside from tourists and real estate, there is no industry there.
Just a bunch of equity-rich rednecks with Hummers and Plasma TV’s.
And wealthy New Yorkers, with gitchy overdone condos, complete with velvet draps, swags, marble floors, and lots and lots of gold embellishments. They all scramble over one another to see whose condos can make it first into some developer’s or “decorator’s” print ads, and one is more hideous than the next (the developers and “decorators” are from up North, too).
Sarasota/Bradenton is toast. I believe we’ve had the largest yoy sales drops and increases in inventory out of anywhere else in the country. This article can apply to any of the new home communities here. Every 3rd house for sale in every one of about a dozen I have been through recently. One community had over half of the houses for sale…all vacant. And ‘george_ie’ isn’t kidding about the Hummers. I must see 2 dozen on my 11 mile trek to work in downtown Sarasota each day….and half are yellow. I saw a Realtor (blonde, maybe 5′2″) a couple days ago trying to get into her H2 and she set off the alarm. She couldn’t figure out how to shut it off for about 5 minutes……but I digress. Not as if she was rushing to go show a house or anything!!
Sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004.
Weren’t we just talking about selling at 2004 prices? Whatinthehell about winning another lottery to the tune of 15% per year appreciation tax free is “getting out?” OERent is $1800 so getting out is $315,000 minus $40,000 of the benefit of living there or $275k.
They would be happy, EXCEPT, I would bet they could only get $300k or so!
Exactly. This is why we are not at the panic stage, yet, as Robert pointed out earlier. This is the denial part.
Awww… the flippers are about to lose their shirts.
Didn’t any of them read about the Florida real estate boom of 1925?!?
Sheesh.
“crispy&cole
2006-05-30 15:29:12
Let me be the first to say:
BAHAHAHHAHAHAHA!”
I’m there with you!
Neil
Flipper Lottery:
1st Place a house in Venice, FL
2nd Place two houses in Venice, FL
[for the record, my mom owns two places in Venice, FL]
“Every week or two we will drop the price down, which usually drums up a few new showings….They started at $230,000, and their price last week was $212,000.”
What fools! They’ll never sell at a profit with a losing strategy like that. They should do what the specuvestors do here in SoCal: If your first price fails to attract any buyers, then raise it another 10-20%. That’ll show those “stupid buyers” who’s boss!
i hate to see it but i really feel for these friggin idiots. just hold the property for 10 to 20 years and enjoy it as a place to live and raise their families rather than a place flip and sell as a profit.
You are right, it is not their fault they are friggin idiots- they were just born with extra chromosomes…..
Free will is a bitch if your IQ is your shoe size.
“Kim and Chris Tritschler, husband-and-wife agents, represent two Stoneybrook homeowners who are looking to rent so they can pay their mortgages. ‘A homeowner is in no position to compete with a developer’ with hundreds of properties to sell, Chris Tritschler said.”
And I bet you that Lennar could make profit on these homes at 250K since they have likely held the land for years and mass production allows for cheaper construction costs.
These people are not “homeowners”, these are people who were smug with pride and their own sense of genius about being newfound RE moguls. Everyone around them sang the same song, they felt so much better than those silly fools who rented while their “lottery ticket” earned them hundreds of thousands of dollars.
They could get out with a meager profit and save themselves from the impending price deflation that is comming, but their own sense of pride and arrogance will cause them to hold out for all the money they “earned” by “owning a home.
They’ll eventually walk away with ruined credit hoping for a taxpayer bailout.
“They did what
“”‘A homeowner is in no position to compete with a developer’ with hundreds of properties to sell, Chris Tritschler said.””"
OCMetro,
You hit it right on the head. All over the US, all these new “real estate investors” figured they could sign a contract with the developer/builder, and 2 weeks later be living high on profits before the house, condo, etc was even built. Did they think they were geniuses or something? Or more than likely they figured they could sell to some fool 6 months later. Since they were obviously not in it for the long haul (5,10, 15 years), as an “investor” probably would be.
Now in many cases, when these “can’t lose investments” are turning south…these people want to blame everyone on this earth but themselves. Sometimes life’s lessons can be expensive…lol
The other side to that statement is that the developers will keep building and selling houses until there is no profit left in them. And that is a long way south of these prices.
Just wait until the number of houses being built falls and the price of labor and materials falls too. Then houses will get even cheaper.
“Experience keeps a hard school, but a fool will learn in no other.”
Ben Franklin, Poor Richard’s Almanac
“Only about 250 of the planned 900 homes are built so far…”
**********************************************************************
Wow! A duel to the death! Lennar will keep building and dropping its prices while the poor deluded buyers will hold out for prices near what they paid…for a while. But the day will come when cash flow problems will overwhelm the owners and they will be forced to drop their prices to …guess what…below what the builder is offering at. And a little lower because the owner’s house isn’t quite new. So what will the builder do? Of course…drop its prices below the owners. And off we go in a race to the bottom. At the end the builder is bankrupt and the owners are too. And lots and lots of empty houses are sitting there. When will this happen? Long before the full 900 homes planned for are actually built. Then we will see a tract of land with homes interspersed with vacant lots and lots and lots of weeds.
Then we will see a tract of land with homes interspersed with vacant lots and lots and lots of weeds.
Don’t forget the feral FBs living in the brush, dodging debt collectors.
OC — absolutely right. No quarter given, none asked.
The only thing worse than a realtor is the Husband & Wife realtor team (& the Mother-Daughter, Father-Son, etc.). God that has always made me want to puke…even before the R.E. bubble.
wow, finally got a relative to sell in Venice- too bad they waited , but now renting new condo 1440 sq feet for $ 1200 all inclusive
I think that’s were my realtors went last year for 4 days ,( to the Florida house lottery ). And I thought they went to Las Vegas .
I cannot believe the arrogance of these people. They are desperate to sell but are selling at $359,000 when they bought at $315,000.
No folks, desperate is is selling at $279,000 when you bought at $315,000. Stupidity and denila is what they are.
Despite all of the big red, flashing signs going off, these morons still cling on to the belief that THEIR property is special and immune to the oncoming slaughter.
Summer is rapidly approaching. Many people are clearing out for the summer. The number of prospective buyers will decrease. We are entering hurricane season. The billions in resets are starting to hit. The investors have totally pulled out of the market.
If you don’t think we are heading back down to 2000 price levels, you are a fool.
Problem is that they need to get that 359K to pay off the HELOC they burned off for that euro vacation, boat, hummer, harley, rock for the wife, plastic surgery, condo to flip, plasma, remodel, granite, stainless, tuition, lavish parties……….. !
Did I leave anything out?
No, I think you covered most of it. LMFAO!!!
You forgot property taxes. I have three friends at work who have admitted to HELOCing to pay property tax.
fees for the bankruptcy attorney
you forgot the 25 pairs of designer jeans. I live in LA and a 15-year-old child of one of my clients honestly believes that $200 jeans are “cheap”.
Yes, granite countertops. =)
Don’t forget the boob job for the wife.
you left out cash….
to maintain their sense of “entitlement”
Thanks for posting this Ben I will keep scouring the market in SW Florida for these articles as I am sure they will only get more prevalent as we get closer to the “fall” of 06′.
“If you don’t think we are heading back down to 2000 price levels, you are a fool.”
I totally agree.
And I am noticing something else too - the Internet and the media are starting to catch on and the wave is travelling fast. It is hard to find any credible media these days that ISN’T talking about the housing bubble. Judging by today’s sell off, even Wall Street understands the bubble and its implications.
LOL!!
Down to 2000 prices huh professor?
Don’t count on it….that would be a 125% drop in Cal, do you realize how absurd that is?….20%-40% is more like it.
PS - ground zero in CA, Sacramento is currently down to Sept 2004 levels…areas dropping the fastest are Elk Grove & Natomas, areas overbuilt and overbought by “investors” - Down 11% since 9/05 peak.
You mean that in 2000 they were paying you more than 100k to get a house in CA? I thinkyou mean a 65% drop.
20%? Are u kidding me?! Do you really think that is it? What about others on this blog?
No way!
-Ed
Down to 2000 prices huh professor?
Don’t count on it….that would be a 125% drop in Cal, do you realize how absurd that is?….20%-40% is more like it.
Your statement is confusing. Are you suggesting that if the price of real estate is on average $500,000 today, that a drop to 2000 levels which was about $220,000, would need to drop 125%?
If the price of real estate of $500,000 dropped 125% would mean the 2000 price would be a -$125,000. Perhaps you made a mistake in your math? Please clarify.
Los Angeles Friends In Deed
Whoa! 125% drop, eh? Better dust off that calculator, chief.
ROTFLMFAO
A 125% means the governement pays you to “own” a house. San Diego condos for every one — or else.
Um jdog, a 125% drop in price would mean that the seller pays the buyer. ($1,000,000 minus 125% of a million gives a negative $250,000)
I hope you weren’t being sarcastic by calling the other poster “professor”. Maybe we need a math profesor?
Wow, you got me there.. 125% drop…lol
You must be a realtor with that math.
for the sellers it’s a battle of attrition they don’t have the money to win.
At first when I read the article I was like wow! Then I got to this part:
“Drive, says her sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004.”
I now have this to say. What are you complaining about? The new homes are still selling for way more than what you paid, so shut the _u_ c_ up! Arggggggggg what is wrong with people. Just a bunch of whiney little pigs that complain, and complain. If they didn’t win the RE lottery to buy, they would complain then too! Now they are complaining that the profit isn’t big enough.
If you assume it costs 10% to sell, that takes a big chunck of change out of any profit. Or $35,900. Leaving $8,100 n profit. Also note the words “would be happy” does that mean they would take $350,000 (break even) or $340,000.
I am speaking of the homes on Dancing River Drive, not Stoneybrook
These people are all screwed and they are all over the place in Florida. These people thought they knew something that no one else knew. This time last year, they were all real estate moguls. I met a few last year when I was in Fort Myers visiting my mother. I told them that the whole house of cards would come crashing down, and soon. Their response was something akin to I didn’t know what I was talking about. It was different this time. And all with smug, condescending tones. To say that I find this hilarious is a complete understatement.
LOL. Fort Myers is toast.
Be sure to remind them ‘you told them so’ next time you see them.
Why did these idiots close? Walk on the deposit and cut your losses - a far better idea.
they could not even swallow a profit of 8k. and you are saying cut losses?
1. California GOLD rush!
2. Internet GOLD rush!!
3. Realestate GOLD rush!!!
In the first very few made any fortune. Uprooting of family, lots of back breaking hard work. Many died. While at it, they had to tame the wild west for all of us.
It has been much easier to make a money with time…pay off has been much better…the number of people involved is getting subtantially higher too.
In the latest, so far most made it, and made it out of Nothin$$$
Are we 1/3 into this unfolding as well…
“They’ve had the place listed since February…” and ““Every week or two we will drop the price down…” and “They started at $230,000, and their price last week was $212,000.’”
Aha — I see your problem, kids — you’ve been dropping the price “down” regularly since February (this being the end of May) and you’ve gone allllll the way from $230,000 to $212,000. Whoa, Mama, that is ALMOST an 8% decrease in your asking price in three months!!! What is this world coming to??? If your agent suggested this, or if your agent agreed to this, or if your agent didn’t drop you like a hot brick for this pricing stategy, get yourself a new agent, kids, and get real. No one promised you a profit and you’d better get your butts out of Dodge if you don’t want to incur a big loss relative to these numbers. IMHO, of course.
One question for them:
“Don’t you wish you’d dropped the price to $212K straight away?”
Ok, one more:
“Did you get any ideas from my first question?”
I finally got around to reading about the blood-letting on Wall Street today. The article I read blamed much of it on Walmart’s lackluster sales, who in turn blame energy prices and eroding consumer confidence. Throw in the war and all of the other bad real estate news, plus a dose of rising rates and I think we’ve finally reached the “perfect storm” many of us have been crowing about for some time. I thought only a few weeks back Walmart was saying things were fine, the government was saying consumer confidence was alright, etc. This mania really is worldwide and seems to turn on a dime. I think with all of the instant news we’re able to get courtesy of the internet is only going to speed up the crash.
We might be looking at a major meltdown in the next 6 months - can’t wait to see what all the soft-landing folks will have to say, then.
Once again, an argument erupted on cnbc on how retailers have all these different names to make the numbers fit.
Same store sales
In store sales
Year over year sales
Month over month sales
———
aka.
Sounds like the talk they push with RE.
Stock market is crazy and very un-certain these day. There is general worry about dollar and inflation.
Get out if you can. I sold my stocks two weeks ago, if I had kept them, my stock’s value would have been 5% less.
There is always lots of uncertainty in the market. The press uses it to explain every movement especially when there is no news. Iraq, consumer confidence, oil, dollar, real estate, hot weather, cold weather, rising rates, falling rates, inflation, deflation, stagflation, whatever. Rising rates are blamed for deflating stocks one day on inflation worries, and they bring stocks up another day. It’s just talking points for the talking heads. People must know why stocks went up or down. Same for the RE market, slow sales due to weather, holidays, superbowl, late Easter, whatever. It’s mostly BS.
Music to my ears.
The Walmart near me (Ann Arbor MI) was *hopping* when I went to it. I think that a chunk of people who would normally be hitting Target decided they needed to pinch those last few pennies and slum it at Sam’s. It’s the only Walmart I’ve ever been to, and people tell me it’s a cruddy one compared to those elsewhere in the country. They do shave 15 cents off the price of juiceboxes but I find it too demoralizing to go inside. Meanwhile, the local Targets seem utterly dead to me as they go ‘upscale’ with displays of leatherette furniture and real wineglasses. I think that will be a bad play for them….
Cramer was hosing Target the other day. I don’t bother going there anymore. The only thing I remotely consider is the storage stuff/home furnishing knick knacks. And that’s a need once every few years.
Target’s not even that cheap, quite frankly.. Their groceries cost the same as local grocery stores, their furniture’s no better than Ikea, their lighting selection is sparse and overpriced, and if Costco isn’t cheaper on other useful things then Wal-Mart is.
/Shrug too bad there’s no Ikea in Delaware….
Wal-Mart is just like any other business. They will lie all the way to the bottom until the numbers can’t be covered anymore. Does anybody still remember Enron? I also remember two weeks ago when Mr. Scott appeared on one of those morning financial shows and told the world how great sales were. Get used to the fact that nobody want to be up front and honest. I know a real estate agent who told me how great things were a few days ago. I found out later he lost two employees last week because sales were so slow they couldn’t pay their rent. Lying bastards.
Damn I wish more people read this blog.
Market’s not tanking yet in Anne Arundel co., MD, where I live. Saw a few signs of hope, one house sat for about 6 months and 4 price reductions before selling. Inventory is up, probably 50% over last year, but looks like prices are rising a bit still overall, and the lower end condos (200-250K) sell real quick.
If potential buyers would refrain from even visiting any property until it sat for a minimum of 2 months, we could do some real damage to these sellers.
Rallymonekey, have you been over my way?
baltimorehousing.blogspot.com
You’re seeing what I’m seeing in Balt. Co–TH’s around $200K fly off the market ,anything above $300K sits for a while. Your inventory is up much more than 50% from last year–try 121% (1499 in 4/05 vs 3314 this past April. It’s coming, be patient. Carroll County has already seen YoY declines.
Yes, I check out your blog often. How do you find inventory numbers? I usually just look at listings on realtor.com, but don’t know where to find inventory for past dates.
In 21113 (my zip) inventory was around 180 at the beginning of the year, and quickly jumped up to the 275-280 range, where its been sitting for about a month.
Yes I know what you mean. I live in Southern Maryland about 1hr from DC and prices are still moving up slowly, even with an increase in supply. We had a house just sell in my neighborhood for 5K more than asking price. I don’t understand it, I would try to sell now and rent for a year if it wasn’t for the expenses in closing in the state of MD (about 5% of the sales price will be closing costs). One bit of hope is the attitude of housing is changing, I have heard the locals says for years “We are different down here, prices will always go up, we are the lowest cost of living within an hour of DC, blah blah blah”. The same stuff they hear from every real estate agents trying to push you into a house that is 50K more than you wanted to spend or can afford. I think the bubble is coming and I hope it puts these real estate agents salaries back in line with where they should be for a job that requires a weeks worth of training. Real estate agent salaries remind me of people that made very basic web pages for big bucks in the dot com bubble. By now they have had to up their skill set or find a new line of work.
Problem is that they need to get that 359K to pay off the HELOC they burned off for that euro vacation, boat, hummer, harley, rock for the wife, plastic surgery, condo to flip, plasma, remodel, granite, stainless, tuition, lavish parties……….. !
Did I leave anything out?
I can add a few for these friggin’ delusional idiots. Need full amount to cover the meth, fabulous night with the hookers, bribes for all ‘officials (crooks), other ‘get rich quick’ schemes that emptied their wallets/purses, bachelor/ette parties, trips to the strip clubs, donations to Jerry Falwell (any other phony TV religious zealot)etc LOL
do not forget “competing with family members”>
lol at this
Problem is that they need to get that 359K to pay off the HELOC they burned off for that euro vacation, boat, hummer, harley, rock for the wife, plastic surgery, condo to flip, plasma, remodel, granite, stainless, tuition, lavish parties……….. !
Did I leave anything out?
I can add a few for these friggin’ delusional idiots. Need full amount to cover the meth, fabulous night with the hookers, bribes for all ‘officials (crooks), other ‘get rich quick’ schemes that emptied their wallets/purses, bachelor/ette parties, trips to the strip clubs, donations to Jerry Falwell (any other phony TV religious zealot)etc LOL
Lowell, MA has lotter winners, too:
Foreclosures spike in Greater Lowell
By TOM SPOTH, Sun Staff
LOWELL — Until this spring, Northern Middlesex County had managed to buck the statewide trend of increased foreclosure filings.
That has now changed in a big way, according to Middlesex North Register of Deeds Richard Howe Jr.
In March, the foreclosure process was started on 48 homes in the region, double the number from last year in that month. In April, 58 homes were threatened with foreclosure, up 76 percent from 2005. And during the first 23 days of May, 61 properties were hit with foreclosure filings, a startling 281 percent year-over-year increase.
“It was like a gas pump going up,” Howe said of tracking the foreclosure numbers this month.
The reason?
Howe surmises that because the housing boom was late in coming to the region, the wave of foreclosures may also have lagged.
“The amount of time from when the market peaked to when the foreclosures started spiking is kind of similar,” he noted.
A complete story will appear in tomorrow’s Sun
Wow, sounds like we need to have a party. As befits my username, I’ll bring the champagne. Well, it would be sparkling wine and not genuine Champagne because I’m cheap, but I hope you understand.
Seriously, I’ll be in LA in a couple weeks and looking for something to do.
Hit some open houses. That’s what bubble tourists do.
don’t say ‘cheap’, say ‘frugal’!
Are you that cheapskate from the American Express commercial?
BTW, I thought “pass the bubbly” means hitting a bong.
you are showing your age!
They finally updated the inventory stats for NoVA. Available listings: 21,408, a 19.2% increase from the beginning of the month, and a 324% increase from this date last year. Thus, the heralded Spring selling season draws to a close. According to the charts posted on the website, inventory began its vertical climb in June of last year. It will be interesting to see how much higher the inventory level rises through Fall. There are entire developments under construction all over Loudoun County. Whole subdivisions of eight-thousand square foot McMansions waaaaay out in the sticks, easily a 90-120 minute commute from DC.
Towers of condos are starting to hit the market as well.
would love to join a party if enough in ABQ or the Bay area (when I am up there). Would look to visit LA periodically (but very sporadically). I would always be there in spirit. This blog is a lot of my life right now.
You can always come down and party with us here in OC.
Oh, by the way, inventory here in OC topped 15,000 today.
I’d rather drink than drive.
Whoops, I meant that response to be for the “hit some open houses” comment a few posts above. I’d be happy to drive down to the OC for a bubble party.
The bubble party should be held at open houses. Preferably the ones where they serve food and drinks.
Now that would be mean. Can you picture some real estate agent being thrilled to actually get traffic and the finding out that everyone is some non-buying bubble beleiver. Might be fun, but it’s kind of like taking joy at seeing the sporty car that passed you a minute ago pulled over on the side of the road for speeding.
People in Vancouver are still attempting to skew the numbers. Is it any surprise? Our day of reckoning is already upon us.
would love to party with anyone here on ben’s great blog.
Naah, everyone here is too smart and careful. You need to find some recent RE bazillionaire to get into the hookers and blow.
Couldn’t we meet at a beach that allows us some “Two-Buck-Chuck?”
It has been kicked around a couple of times for a gathering in OC.
The blog and the bubble have such visibility that I think it would get crash by the RE industrial complex lurkers and would be an ugly scene.
Never forget the value of liquidity, the time value of money, and our old friend Opportunity Cost. Even breaking even is a loss. The hardest lessons are the ones you remember.
Even for here in Florida, I agree that this ranks as pretty amusing. On the other hand, IMHO the situation still hasn’t percolated down to the masses. Just during the last week, after pointing out the number of for sale signs and explaining that I believe housing will crash like nothing any of us have ever seen in our lives, I’ve had otherwise smart people enthusiastically tell me to “consider looking at neighborhood abc,” or that “houses in neighborhood xyz only go up!” I’ve also had two people–both of whom know that I rent–foist the names of realtor relatives on me. I felt like replying that half the realtor population will be unemployed in three years, but tact intervened.
My Mother-in-law, an otherwise intelligent and nice person explained to me (over e-mail) that San Francisco prices will not drop because “it’s only 49sq miles.”
I asked her: “Wasn’t it 49 square miles 5 years ago when the prices were half what they are now?”
No response.
Hong Kong is ‘only’ 424sq miles, with 7 million residents, yet historically suffered declines in excess of 60%.
HK is the most agressively cyclical market in the world, with a cycle that looks more like a heart monitor than a range of rolling hills.
In HK, leverage is typically very low in global terms for this very reason.
Regards,
Loafer
Firsttimehomebuyer, I had to laugh a little after reading your post. My wife and I were thinking of retiring in A or LC to the south. We found prices there to be almost as bad as CA. Here in CA I can get great medical, go to the beach, mountains, deserts, etc within a short amount of time. Granted CA has its problems and I’d rather retire in Santa Fe, but not at those prices.You can spend $300K to $400K in LC for a shoebox in the desert. This bubble has gone further and wider then most people realize.
OT but a good read: http://www.nytimes.com/2006/05/31/us/31prepare.html?ei=5090&en=467e4e2eb6fdbce3&ex=1306728000&partner=rssuserland&emc=rss&pagewanted=print
May 31, 2006
As Hurricane Season Looms, States Aim to Scare
By ABBY GOODNOUGH
“It’s like a psychological issue — ‘If I don’t think about bad things, bad things won’t happen.’ “……In Florida, the second annual tax holiday on hurricane supplies, from May 21 through June 1, has not drawn an overwhelming response, several store representatives said. But at least one store, the Lowe’s in South Fort Myers, was selling more generators than barbecue grills last week, said John Sandford, operations manager there.
At a Home Depot, Brenda and Jerry Dyche of South Fort Myers were shopping for a generator last Wednesday. With that and a new roof, they said, they had no reason to flee……In Florida, the second annual tax holiday on hurricane supplies, from May 21 through June 1, has not drawn an overwhelming response, several store representatives said. But at least one store, the Lowe’s in South Fort Myers, was selling more generators than barbecue grills last week, said John Sandford, operations manager there. At a Home Depot, Brenda and Jerry Dyche of South Fort Myers were shopping for a generator last Wednesday. With that and a new roof, they said, they had no reason to flee….”The big shortfall is complacency with the community,” said Randall Webster, director of Horry County Emergency Management. “Our main theme is, take interest as an individual and make preparations.”
But will it work? Emergency management officials groaned this month at a poll by Mason-Dixon Polling and Research Inc., which found that of 1,100 adults along the Atlantic and Gulf Coasts, 83 percent had taken no steps to fortify their homes this year, 68 percent had no hurricane survival kits and 60 percent had no family disaster plan….The latter reminds me of today’s home buyer…..
Why prepare when you can rail agianst the government… whichever side you don’t like… if things don’t work out.
Now how would you like to be a home owner in this neck of the woods: “The marmots are coming, the marmots are coming.” Seniors living in Wine Country Villa probably wish they had gotten such a warning.
Residents say the oversized rodents are swarming through the 75-unit development of manufactured homes near the airport of this Eastern Washington town, burrowing under homes, fouling front porches with their droppings and _ according to some unconfirmed accounts _ attacking people.”………..damn, sometimes renting is a goooooood thing.
“The marmots are coming!” ROFL! Sounds like a line out of a good horror B-movie!
Or _The Big Lebowski_…
Wahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh!!!!!!!!!
Amazing all the new homes for rent in Sarasota and nearby areas. I see as low as $1200 rent for new 2k sf+ homes I bet folks payed way into the $350k range for..
http://www.realtor.com/FindHome/HomeListings.asp?frm=bymap&mnbed=3&mnbath=2&mnprice=0&mxprice=99999999&js=off&pgnum=1&lnksrc=&fid=so&mnsqft=0&mls=xmls&vtsort=&typ=7&poe=realtor&exft=e2cargar&ct=Sarasota&st=FL&areaid=110&all=&areaid=91950&areaid=18269&areaid=54791&areaid=59048&areaid=54294&areaid=8719&areaid=133&areaid=82594&areaid=48560&areaid=3824&areaid=90882&areaid=81741&areaid=83103&areaid=97617&areaid=90672&areaid=16559
This is extremely interesting. Numbers straight from the brokers. 10 new listings for every contract (sale). And they won’t take new listings because they already have too many.
“Buyer Inquiries – A new category for the weekly report. We saw an average week for the number of inquiries, maybe even a bit up. Unfortunately, all of these potential buyers were looking for bargains. That is the first thing out of their mouth. Not only bargains, but steals. The typical caller wants a home with 4 bedrooms, 3 bathrooms, 2 car garage on an acre with a pool for under $300,000. Me too.”
http://globaleconomicanalysis.blogspot.com/
Isn’t it funny that the really good data on the housing bubble has come from blogs ?
I found this part interesting:
“Listings – We received 10-12 calls from new sellers, but we turned down all listing requests this week with the exception of two. The two listings we took were referrals from good clients. Moving forward we are not going to take any listings unless they are priced 2-5% under the market.”
Many said it here, and it looks like you were right. The RE agents will lead/force/talk the sellers down from their lofty heights. The agents are soon to be our unwilling allies, at least for a little while. What happens when RE agents only take selling listings that are 2-5% under market? The market obviously drops. And the great thing is that this will feed on itself. Once a few 2-5% under market offers are sold, that becomes THE MARKET… and then the new sellers must bid 2-5% under that to remain competitive. All the way down. (to 30-40% off current levels in many markets IMO)
cool
clouseau
Very soon it will be the buyers saying “Oh, I can’t pay that. The last house is this neighborhood sold for that… I’ll need at least 3% off… having you ever heard of looking at comps?”
Question for everyone: Does anyone know where the overvalued real estate blog was moved? When I Googled it, I wound up on a Chicago commercial real estate site. And it also got a mention in a Business Week article but the link in the article still takes you to the Chicago commercial RE site.
http://tinyurl.com/pbjj4
BTW, did you check out that 299 sq ft house for $200,000 in Los Angeles that’s covered in the article?!? Wouldn’t that be a cabin or perhaps an oversized walk-in closet? My own bedroom is 140 sq ft (10 x 14), and that’s NOT counting the walk-in closet.
UN-belivable.
And someone probably bought it, too.
BayQT~
Got my answer. It was taken down along with a couple others. See the Marin Real Estate Bubble blog. http://marinrealestatebubble.blogspot.com/
Apparently there was some kind of hack and the page’s new code causes a redirect or there was an overwrite. I wonder what this is all about. Ben? Something you may want to check out.
BayQT~
I think that the same thing happened to the “There is no housing bubble blog” which was the best piece of satire on this ugly mess.
Any comments for this guy?:
“Don’t Hold Your Breath
By Damon Darlin on Prices
“An interesting comment for all those who gleefully await the real estate crash can be found at the end of the Surreal Estate column of the San Francisco Chronicle.
“Columnist Carol Lloyd notes that even if prices drop significantly, they have appreciated so much over the past few years that the people who couldn’t afford a house in 1997 won’t suddenly be able to afford one in 2007.
“Bubble or no bubble, it’s as if real estate froth had become like fog: a permanent part of the landscape that many of us, for better or for worse, have decided to live with.
“Not only would prices have to fall more than 50 percent, but mortgage rates would have to come down. If prices crash, it will because morgage rates are high, so no one wins. – DAMON DARLIN”
“Not only would prices have to fall more than 50 percent, but mortgage rates would have to come down. If prices crash, it will because morgage rates are high, so no one wins. – DAMON DARLIN”
I’ll win because I’ll buy for cash when prices correct and mortgage rates are high.
Yes, amazing how much people just assume that you have to borrow to buy anything. If you borrow only 50% of the cost of the house then its just like interest rates are 1/2 of what a 100% borrower pays. The more you save the better return you get on your savings as the interest rates go up as well. That means it will take a lot less time to save up for a house as the compound interest helps you save.
I love this guy’s “all-or-nothing” attitude. “If prices crash, it will be because mortgage rates are too high, so no one wins.”
I know if prices crash then my wife and I really do win the freakin’ powerball lottery and so does mostly everyone who reads this blog.
“..a permanent part of the landscape”? WHAT BS!
I am looking for price history statisctics for Los Angeles and/or Southern California from the late 1960’s to the mid 1970’s.
Any online resources available?
http://www.housedata.info
OT:
I also noticed that Overvalued and ThereIsNoHousingBubble were no longer there (replaced by stupid spam sites). I initially thought that ThereIsNoHousingBubble was just stopped (I wrote an open letter to him on this blog the other day), but now it is clearly an attack.
I wonder if there are attacks vs non-RE related sites. Anybody read any other sites that have gone down recently (it may be general anti-Blogger attacks, and not anti-RE blog attacks).
And also: Ben, you might want to be real careful here… I have no idea what you can do, but yours is the most popular and influential RE blog site at this time.
and lastly: perhaps some of us could hit that donate button, to reward Ben for his extra effort (on top of everything else!) . I did a few weeks ago, it felt good to pay for my entertainment, to keep it going!
clouseau
House Inspector:
What is your blog?
There is no housing bubble came back up with a definition of satire for a couple of days and went back to spam.
I tried looking for those sites also and got the Chicago RE spam, and nothing for ‘Thereisnobubble” I hope we can get them back.